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U.S. Supreme Court exempts some for profit corporations from Contraceptive Mandate
U.S. Supreme Court exempts some for profit corporations from Contraceptive Mandate
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U.S. Supreme Court exempts some for profit corporations from Contraceptive Mandate

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On June 30, 2014, the U.S. Supreme Court ruled in Burwell v. Hobby Lobby that closely-held, for-profit corporations are not required to comply with the Affordable Care Act’s (ACA’s) contraceptive …

On June 30, 2014, the U.S. Supreme Court ruled in Burwell v. Hobby Lobby that closely-held, for-profit corporations are not required to comply with the Affordable Care Act’s (ACA’s) contraceptive mandate if doing so would violate the owners’ sincerely held religious beliefs. How will this affect employers?

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  • 1.   U.S. Supreme Court Exempts Some For-Profit Corporations from Contraceptive Mandate Publication Date: 22 July 2014 | Author(s): Scott Wagner, Katelyn Winslow Member Firm(s): FordHarrison Country: United States On June 30, 2014, the U.S. Supreme Court ruled in Burwell v. Hobby Lobby that closely-held, for- profit corporations are not required to comply with the Affordable Care Act’s (ACA’s) contraceptive mandate if doing so would violate the owners’ sincerely held religious beliefs. Instead, the majority in the 5-4 decision held that employers with religious objections to the mandate should be permitted to utilize the “religious exemption,” a procedure that is already available to religious non- profit organizations that object to the mandate. This exemption shifts the cost of providing contraceptives to the organization’s insurance carrier or another third party. Exempt employers are circumvented, but employees still have free-access to mandated coverage. Recognizing that the precedent set in Hobby Lobby had the potential to allow future plaintiffs to opt out of more than the contraceptive mandate, the majority attempted to narrow the applicability of the holding to closely-held, for-profit entities that are owned by individuals whose “sincere” religious beliefs are in opposition to contraception, or certain forms of contraception. However, recent case law has already widened the holding in this case, so the status of the contraceptive mandate and the impact of Hobby Lobby remain unclear. The Contraceptive Mandate The ACA’s contraceptive mandate requires covered employer-sponsored health insurance to offer cost-free coverage of all FDA approved contraceptive methods. The companies in this case objected to providing coverage for certain contraceptive drugs that prevent an already fertilized egg from developing into a viable pregnancy, claiming doing so would violate their owners’ religious beliefs that life begins at conception. Companies who fail to comply with the mandate are subject to penalties of up to $100 per employee per day, which would have cost one of the plaintiffs up to $1.3 million a day. Violation of Religious Freedom Restoration Act The companies filed suit under the Religious Freedom Restoration Act (RFRA), which prohibits the government from taking action that substantially burdens a person’s exercise of religion unless that action is the least restrictive means of furthering a compelling governmental interest. Prior to this holding it was not clear whether a for-profit corporation would be considered a “person” for the purposes of bringing a claim under the RFRA. However, the Court in Hobby Lobby held that for- profit companies do have standing to bring claims under RFRA and that the contraceptive mandate violates the plaintiffs’ rights protected under the statute. The Court held that the economic penalty resulting from failing to comply with the mandate (not offering contraceptive coverage in their employer-based health plan) is a substantial burden and is not the least restrictive means of furthering the government’s interest in providing cost-free access
  • 2.     to contraceptives. The Court held that the government’s interest could be furthered by offering for- profit companies an exemption from the mandate, like the aforementioned religious exemption. Although, the majority opinion emphasized that the holding applied narrowly to the facts presented by the Hobby Lobby plaintiffs and that the decision rested on the religious exemption as the least restrictive means of furthering the government’s interest in providing contraceptive services, the scope of that holding was widened three days later. In Wheaton College v. Burwell, a religious non-profit college objected to filing the religious exemption form, because the form notifies the third party that the employer will not be providing contraceptive services, which in turn causes the third party to provide those services to its employees. The college claimed that filing the form would make it complicit in the provision of contraceptives by triggering the obligation for someone else to do so. The Court held that instead of filing the form, the college could write a letter to the government stating its objection to the mandate, which would trigger the exemption and block the government from enforcing the mandate against the college. In a fifteen-page dissent, Justice Sotomayor accused the majority of retreating from its position in Hobby Lobby, stating the Court’s action “evinces disregard for even the newest of this Court’s precedents and undermines confidence in this institution.” Employers’ Bottom Line: Although the Court’s decision in Hobby Lobby is narrow, employers clearly can expect more litigation over the contraceptive mandate and, possibly, other provisions of the ACA. Taken from the Ius Laboris Knowledge Base: www.globalhrlaw.com About Ius Laboris Ius Laboris is an alliance of law firms offering employers cross-border employment and pensions law advice. It has 1,300 specialist HR lawyers in over 150 cities and 44 countries. Ius Laboris offers access to the best local HR law experts in one global team with 20% more ranked employment lawyers (Chambers & Partners, November 2013) than any other global HR legal services organisation. Further, Ius Laboris has 50% more recommended lawyers than its nearest rival in a recent survey in PLC's employment law guide. Clients include many household names as well as multinational companies in all sectors ranging from energy, retail and technology to pharmaceuticals. For more information on Ius Laboris, please visit iuslaboris.com.

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